Holidazed

“Both me and my wife are avid readers of your blog. Hey, nothing compares on zipping a cup of warm dark coffee and reading your blog! Over the weekend, when either one of us discovers first the moment you have blogged, it is immediately announced in our household: “Garth has written!”. (end of suck-up).”

Well, that part is okay. Now the icky stuff.

“The past few months we had been debating on selling our vacation condo unit and adding that money to the balanced portfolio. On many financial decisions doesn’t anyone reading your blog ask themselves this question?: “Hmm, what Garth would do?”.

“A funny thing happened a few nights later… As I was dreaming that night I found myself in what it looked like your office. I was standing in front of your desk while you were having a look on a bunch of financial statements. As you were shuffling through the pile you stopped on our condo property taxes document which immediately caught your attention. With a very serious tone, frowned and finger tapping on that paper you looked at me and said: “You know, this has to go!”.

Well we followed the advice of your dream figure and we finally listed! To the blog readers: please don’t wait for Garth to show up in your dreams to follow his advice. He’s may not be as nice as in his blog. Perhaps we could prepare some coffee with cookies for next time we meet in dreamland (do you enjoy coffee with cookies?).”

No, dammit. And stop visiting my office in your PJs.

Now, as to the wisdom of having a vacation condo, Harry at least made the correct decision. So many people have been roped into buying a box in some exotic place like Hawaii, the Caribbean or Vernon trying to justify a whimsical, romantic and flighty material dalliance as a hard-core investment. It isn’t. Even if you ‘invest’ in one of those complexes which arranges short-term rentals of your unit, it’s still a bad idea.

First, consider the cost. Even a ‘cheap’ $300,000 unit somewhere will require a downpayment, financing, condo fees, property taxes and possibly a management fee – like twenty grand a year or more. If you fork over cash for the purchase, then that’s money which could be invested and working. Count that as a true cost, plus all of the other overhead.

The point is simple. Cost-efficiency. If you spend two three or even six weeks in the condo, why own it for 365 days a year? Just short term-rent. You’ll be far ahead in terms of cash flow, plus you’ve avoided a lot of risks. The property could depreciate. The local market could crash. The local currency could slide or inflate (well, maybe not in the Okanagan). The local government could slap on a silly new tax (a big problem in the OK). The destination could fall out of favour. Your spouse might grow to hate it, yet you can’t easily sell.

As popular as it is for we beavs, the US is a problematic place to stash wealth in the form of real estate. Some jurisdictions (like Florida) stiff foreigners with a higher property tax rate. You have to be careful about what work you do around your own property, since this can fall afoul of the law. When you sell there are withholding taxes, with the IRS keeping 10% or 15% of the sale price. If you rent the place out, you’re subject to a 30% non-resident withholding tax on the gross (not net) income. This is money you’ll not be able to claim under the cross-border tax treaty. (There are ways to mitigate the hit, but it’s complicated.)

When you sell, lots of paperwork to do, on both sides of the border. America taxes capital gains first, then you can claim this against any Canadian tax payable on the sale. And good luck if you need financing for an American property. Not easy. So best to use the US sub of a maple bank.

So when does it make sense to buy a vaca spot? The short answer is never. Unlike a family cottage, you ‘re unlikely to pass it on to anyone as a treasured asset (because it costs too damn much to own), nor will you ever retire there (residency restrictions). So, instead, invest the money and use the growth to finance your holiday. Better still, take no holidays, work incessantly, be driven and die early with a massive pile of dough.

The borrowing and spending binge by Canadian households, businesses and governments (all levels) continues unabated.

At the end of September, 2018 the total debt outstanding in Canada (bottom line of the Statistics Canada credit market summary data table) was $7.953 trillion. At the end of September, 2017 the total debt outstanding was $7.577 trillion. In the 1 year period from the end of September, 2017 to the end of September, 2018 it increased by $376 billion. This is an increase of 4.9%.

In a similar vein, I need to find someone who can advise about how to get out of a timeshare. We bought one long before the advent of online hotel reviews and Airbnb, and it sucks to still be roped into it. The properties are nice but it’s an albatross…

Garth totally agree. I was looking at buying a loft in Montreal to enjoy in the summer. Then I decided it made more sense to invest the money in some REITs and use the distribution money to rent a nice place off AirBNB anytime I want to visit instead. Much simpler. Less headaches.

We were fortunate last month to snag a young FTHB couple suffering from FOMO and well schooled in realtor math to pass the heavy burden of home ownership onto. I can load my TFSA and RESP’s up every year with the savings from renting, and gain an hour a day avoiding the soul-sucking commute through west kelowna. Thanks hon. garth and blog dogs for the sage advice over the last 4 years. My M & FIL are sure mad, they both needs a lesson in math

Is there an annual residency period that makes another place, say a winter condo somewhere south, financially sound? (3 months? 6 months?) What about when you compare the low prices in some American states with the crazy prices in Canada? Interest rates and down payments must play a role, but at some point it has to make sense.

Mattl at 173 suggests the ratio is confusing and not that scary saying:

I believe they are talking about overall debt to income. So lets say I make 100K, and owe 172K, I have a debt/income ration of 172%. This is much different, I would be very comfortable with 100K income and 172K total debt if that debt included a mortgage. Even more so If the house has a current value of 500K.

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Absolutely right. In not one case have I seen this described correctly as debt to ANNUAL income.

They just say debt to income without any time period of the income bothered to be mentioned.

And the implication seems to be that anything over 100% is a disaster. Look Canadians owe more than they make!

Everyone seems to have an agenda and describing things clearly and plainly and fairly is not usually part of that agenda (except in my case of course).

++++++++++++++++++++++++++++++++++

Yes, it is debt to annual (disposable – so implying after tax) income. It is also an average. Since I have very little debt (a fraction of my income), then I pull down that average. There of course are many similar. There are many others, therefore, who are pulling it up with higher than the average. Those would be the ones in potential trouble.

Is 178% a bad number? In and of itself, you can’t say. However, the number is tracked by country, and over time, so you can look at history to see where the ratios were when problems erupted in other places. I seem to recall that just prior to the Great Recession the US numbers were similar to what we are at now.

And of course, this ratio rising at the same time as debt servicing costs rising, isn’t a good sign.

No SIGNIFICANT downturn in Canadian real estate prices will happen until a SIGNIFICANT downturn in real estate happens in China. Full stop.

A weakness of what I read here is that it takes too much of a national or local view of real estate but real estate capital flows are truly global now. Unless you factor in the global capital flows you will always be dumbfounded by the behavior of the local real estate markets.

Investment condos are crumbling in China but it doesn’t matter because the prices are still holding. The chinese are well aware that these places are crumbling but so long as they all agree the value is still there they are still able to leverage those properties into new loans for other assets.

This also explains why Canadian real estate is so desirable to them because they can sell a crumbling asset over there, transfer the money, and buy quality asset in Canada that is 4 times the size and in an excellent location. It doesn’t seem fair that people can exchange crumbling condos in one country for beautiful single family homes in another but this is how global capital flows work. The capital moves where there is a pricing inefficiency.

Curious what an investment condo in China looks like? These guys in the video show you a typical example

We rent a cabin or cottage every summer. Never had any desire to own. Generally there are enough of us we may each be out a few hundred bucks. The property is there primarily for sleeping and eating anyway. The majority of the time is spend on the trails when in the Rockies.

I am fortunate to have a friend who’s family has a cottage in the Muskokas that we can visit when in Ontario. You need a boat to get to it so it is more or less out of commission 1/3 the year. Awesome spot though.

…….
Equitable Bank, a wholly owned subsidiary of Toronto-based Equitable Group Inc., has launched a new line of credit product that offers Canadians aged 50 and up another way to fund their retirement.

Through the bank’s cash surrender value (CSV) line of credit, clients can borrow up to 90% of the cash surrender value of their participating whole life insurance policy without making ongoing payments and affecting the growth of their policy.

On topic (for once) but we use long stay hotels approximately every second year.

We’ve been all through Portugal, Spain this way. Don’t take the package, just the room. Also don’t go via travel agent or anything like Kayak….just go to the hotel’s website and do it direct. I kid you not, better service, better drinks, prices are the same.

We mostly go to Tavira now as it isn’t over run with drunks yet. Also close to Spain and north Africa is a day trip away.

Last time 2 months was less than $2,000 for lodging and that includes a night or three in Spain/Tangiers.

There are long stay hotels just about anywhere you would want to go. NA and overseas.

That dream condo in Arizona/Florida, don’t die! Unless you have undertaken proper estate planning with a firm that specializes in Canadian, US, and state law that you plan on buying that dream property in. And having just a will won’t cut it. Without proper planning winding everything up can take years and is expensive.
Do your homework before you get the cheque book out!

@#15 Calgary Guy
“You need a boat to get to it so it is more or less out of commission 1/3 the year. Awesome spot though.”
++++
Nope.
Year round.
Check it out in Feb when the lake has been frozen for a few months.
Ski or skidoo with food, booze etc.

No bugs, no people, no noise.

I’ve camped in Glaciologist huts in the middle of winter and it was awesome.

One caveat.
Bring mouse traps. 4 is usually enough.
The little buggers will be starving and be going nuts when you start cooking. So unless you want holes gnawed in your sleeping bags, rucksack, etc…… Terminate with extreme prejudice …..
Toss their little carcases outside and let the crows do the rest…….

This was one of the original houses I was watching when I noticed they weren’t moving like they used to back in the good old days.

The details…

904 e 37th ave ,Vancouver.

Paid 1.2 August 2018

Originally asking1.49

Now asking 1.29

Assessment 1.45

So this is the one where the elderly neighbor struggled to sell it to move back East to be with family.

She was eventually successful and unfortunately passed away a short time after moving.

Not the happy ending I was hoping for.

The new guys came in and immediately tried to flip it but hit a brick wall.

They eventually moved in and after a while on the market and a few stunts like dropping the price to 999k before anything much was going for a million, they moved out and let someone sign a rental lease apparently.

Today, back for another kick at the can at a asking price designed to pass on the closing costs.

The old lady wanted a similar number before they whittle her down.

At the start of all this it was one of the cheapest option in town, now they are 300k above where the market has fallen to.

David Rosenberg , Glusken Scheff on BNN today, calling for a recession in second half of 2019. His strategy for next year, long corporate bonds short government bonds. Says alternate strategies only chance of positive return next year.

I took a look today and believe it or not , you can get 3%on a 1 year GIC.

The unfriendly tone Canada has set with our Chinese friends showing Ms. Meng the inside of a Canadian detention centre does not rank as “wholesome welcoming friend behavior”. It ranks of something one expects from a middle eastern imperialistic sovereign already cluterring up the domestic foreign reception room. Our ability to play nice surely has entered the fraught playground of kindergarten. Experiencing the 1999 housing bust on Vancouver Island when our Chinese friends decided to repatriate their renminbis bigly like only Asians are proud to show us mild little meek tight Canadian pockets left all of British Columbia in a giant “pickle”. Should the Chinese pull out a their huge real estate portfolio from Canada British Columbia will no longer have the luxury of a “housing crisis”.

#28 For those about to flop… on 12.14.18 at 7:12 pm
Today is my 16th wedding anniversary.

>Congrats, Flop!

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I miscalled the bottom of the N.A. stock markets. I thought it was on Tuesday. A Johnson & Johnson scandal rumour reported in Reuters scared the markets down further. I still think the Santa Claus rally will occur next week. If I get this wrong: It was the man-bun guy.

#32 Out Of Work CEO, Will Travel on 12.14.18 at 7:51 pm
The unfriendly tone Canada has set with our Chinese friends showing Ms. Meng the inside of a Canadian detention centre does not rank as “wholesome welcoming friend behavior”. It ranks of something one expects from a middle eastern imperialistic sovereign already cluterring up the domestic foreign reception room. Our ability to play nice surely has entered the fraught playground of kindergarten. Experiencing the 1999 housing bust on Vancouver Island when our Chinese friends decided to repatriate their renminbis bigly like only Asians are proud to show us mild little meek tight Canadian pockets left all of British Columbia in a giant “pickle”. Should the Chinese pull out a their huge real estate portfolio from Canada British Columbia will no longer have the luxury of a “housing crisis”.
_ _ _
Nice translation, Bot.

“#7 Chimingin on 12.14.18 at 4:23 pm
In a similar vein, I need to find someone who can advise about how to get out of a timeshare. We bought one long before the advent of online hotel reviews and Airbnb, and it sucks to still be roped into it. The properties are nice but it’s an albatross…”

There is a great website called Timeshare Users Group that tells you everything you need to know about timeshares. Some have no value but you can give it away so you no longer have to pay the maintenance fee. Don’t ever pay an upfront fee to sell it. Those sharks are worse than Realturds.

Check out the condo featured in this article. It’s a little rich for a representative Pink Snow listing, and really needs a category that reflects the rarified air that it occupies. May I suggest Pink Truffle?

#17 TurnerNation – if you hate your kids raid that life insurance policy AND get a reverse mortgage! Imagine the surprise on their faces when it’s all over.
A sure fire way to ensure they never ever will forget you.
:-)

So that if she is convicted and is sentenced to 30 years in prison….it will be one more win for democracy and freedom…..

“Taiwan is a free country!”

_____________________________

My, my, my,… Democracy, democracy, again and again.

Fatz, do you really understand what democracy is?

Look what the crop of leaders that your beloved democracy produces: Macro, Trudeau, Trump. That’s because unfortunately the voters are made up of Farters like you!!! oh well, rednecks like you probably will understand. Sad!

As for Taiwan an independent country, taunting me is useless. You have to ask the bad Nuke boys in Mainland China to see if they let you…

#32….Our ability to play nice surely has entered the fraught Experiencing the 1999 housing bust on Vancouver Island when our Chinese friends decided to repatriate their renminbis bigly like only Asians are proud to show us mild little meek tight Canadian pockets left all of British Columbia in a giant “pickle”. Should the Chinese pull out a their huge real estate portfolio from Canada British Columbia will no longer have the luxury of a “housing crisis”.

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First of all there is no way we should have detained her at the border. It is clear from Trumps remarks that she is a valuable pawn to be used in the trade dispute, and now we reap the consequences from the Chinese and the americans (if we do not extradite her). Damned if you do or don’t. Wonderful having such good friends eh?
That being said, since we have been repeatedly told by our masters that the housing price runup in YVR and BC had nothing to do with overseas capital. So we have nothing to fear if all the renminbi are repatriated… Frankly I would be overjoyed if all is repratriated and the doors completely shut to foreigners buying real estate…. then our kids can have a future here….

#13 PastThePeak on 12.14.18 at 5:28 pm
#178 Shawn Allen on 12.14.18 at 4:00 pm
Debt to ANNUAL Income

Mattl at 173 suggests the ratio is confusing and not that scary saying:

I believe they are talking about overall debt to income. So lets say I make 100K, and owe 172K, I have a debt/income ration of 172%. This is much different, I would be very comfortable with 100K income and 172K total debt if that debt included a mortgage. Even more so If the house has a current value of 500K.

==========================

It is right here:
At the end of September, 2018 the total debt outstanding in Canada (bottom line of the Statistics Canada credit market summary data table) was $7.953 trillion. At the end of September, 2017 the total debt outstanding was $7.577 trillion. In the 1 year period from the end of September, 2017 to the end of September, 2018 it increased by $376 billion. This is an increase of 4.9%.

On average as a society every Canadian, including kids and retirees spends $ 11,000 more per year than he/she earns.

For a family of 4 with pre-tax income of 76 k average for Canada that is $ 44 k spent more than earned in total debt. In household debt only it is around 12 k per family.

Now the outstanding household debt is just a noise according to some as merely over 3 times after tax annual earnings.

That alone to be paid with saving rates of 10 % requires 15-20 years, inflation included. If no inflation or if wages increase with inflation/interest rates, it requires 30 years. Just to pay debt, nothing else.
No savings for retirement.

On top of that we add 44 k on family of 4 annually to the total debt.
On income of 76 k pre-tax that is around 60 % of income.

On 56 k after tax income that is 84 %.

Some will say don’t count corporate and public debt.
So who is on the hook for the public and household debt? Taxpayers. And who you believe pays corporate debt? Consumers.

So as a consumer, household and taxpayer you cover and pay for all debts.

With another ‘more acceptable’ explanation: Annual growth of total credit of approximately 20 % of GDP (from which 20 % is credit driven), so 25 % of NNP.

So on average we spend $ 125 on each $ 100 earned /produced (125 % of real NNP) annually
+ total outstanding debt equal to 4 times GDP, 5 times NNP.

To pay the outstanding household debt without increasing the burden of other debt we need to reduce spending from 125 % of income to 90 % and it will take 30 years given 10 % saving rates with no retirement savings. Currently we save zero.

No problem with debt, Eh?

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BoC plans are clear – they just started QE with MBS and already have 100 billions in ‘quality paper’.

Plus 2 % established as expected top for the rates for a veeeery long time + plans to move to interest only ‘bonds’ and at 2 % instead of paying debt/deleveraging we keep piling it at record speed/extremely over leveraging.

US used low rates to reduce private debt, we used it to increase it dramatically.

And nobody, no news outlet is talking about what it means, they publish real estate propaganda, liberal government propaganda (all is good, get some pot) and the feud between Kanye West, Drake (the cream of the Toronto ‘culture’) and Pusha T.

I don’t think even the most intelligent sheeple understands the significance of the above.

In a way that is good as it gives people who see what is happening time to prepare but it ultimately increases the severity of what is to unravel, plus the time window to act is rapidly closing.

The ultimately price will be the theft of pensions funds, that CPP increases at 1-2 % while cost of living increase by 8 % + is killing retirees.

The most interesting part is that with the current believe system the more you spend as a society and the more you borrow, the higher your ‘assets’ (in reality liabilities, just wait for house tax increases) go in terms of valuation so you become ‘richer’ !!!

“Ace, you’re assuming you can pull off a Forest Gump and be the only shimpin boat standing after the storm.”

No.

I’m assuming that when people dump their equities and rush into cash, because the big bad bear is coming and everyone is afraid of bears, that those who don’t fear such creatures, can buy oversold stock on the cheap.

If you are afraid of individual companies, not to worry. Buy an index. If things keep going the way they are, buy the SP500 on the dip. It always goes up again. Easy money.

I have so much to say in a funny way but am frightened. These pricks got to me. Even garth is getting scared. Many of my drunken classics never to see the light of day, the respect and dignity of upper case DELETED no more.

#12 ‘Jeremy’ – as Garth says, vacation property costs will not provide a good ROI. Seriously, why shell out many $ for any place you are not going to be occupying on a full time basis? Let’s say you find a ‘dream’ vacation place for $200,000. Before you buy, look up the average weekly rental cost of a similar property in the area you are interested in purchasing in. Let’s estimate it will cost $5,000 to rent a similar place for a month. Now divide that potential $200,000 initial cost by $5,000. Now ask yourself if you would seriously spend one month per year for 40 years in that place. Keep in mind that $200,000 will purchase one heck of a variety of nice rentals in many nice, warm locations – many of which will NOT cost $5,000 for a month of rent. In fact, many vacation rentals have price reductions when someone rents for longer periods of time.

The only time it makes sense to buy is if that vacation location will eventually become your full time principle residence. If that is not the plan, then accept that buying equals conspicuous consumption & do not expect to make a profit. Happy camping!

Often times I find myself pondering if owning a tent is too extravagant an expense and perhaps I should sell it and rent from now on. It’s just that my mom’s schedule has been inordinately tight these past few summers and getting her to drive a small group of friends and I anywhere has been challenging. With the obvious deflation on my original investment in the tent and lack of use the return on my investment just isn’t there. Needless to say this was an enormously expensive and painful lesson.

For the LOVE OF GOD Garth, would please just PAT SOME OF THESE PEOPLE ON THE HEAD and tell them:

What good little boys and girls (and whatever else is surgically possible nowadays) they are for getting rid of their vacation property and investing is some non-descript thingy you occasionally advise about.

These virtue signalers get in the way of/are scaring off the really good fluff, intrigue, conspiracies and dirt Comments that frequent the Blog.

Pretend it was a quiz, drop them a quick “100% Happy Holidays Achievement Award” to give their lives meaning (also add a star or two after the feel good kudos…use an asterisk[s] in lieu).

#32 Out Of Work CEO, Will Travel on 12.14.18 at 7:51 pm The unfriendly tone Canada has set with our Chinese friends showing Ms. Meng the inside of a Canadian detention centre does not rank as “wholesome welcoming friend behavior”… Our ability to play nice surely has entered the fraught playground of kindergarten.

– We arrested her in line with a U.S. extradition treaty; and why do you suppose she was staging through Canada in the first place? “Mexico – Canada – China”? – why not “Mexico – LAX – China”? Oh yeah – she’d’ve been arrested in LAX, and she knew it.

“She didn’t break any Canadian laws!” – U.N. sanctions ARE Canadian laws, and I got no problem arresting somebody who’s helping-out the murderous Iranian thugocracy under the table, as China (in general) and Huawei (in particular) almost certainly were. As CFO and the founder’s daughter, she’d know that too – and if Huawei weren’t, she’ll be found innocent and released.

Experiencing the 1999 housing bust on Vancouver Island when our Chinese friends decided to repatriate their renminbis bigly like only Asians are proud to show us mild little meek tight Canadian pockets left all of British Columbia in a giant “pickle”. Should the Chinese pull out a their huge real estate portfolio from Canada British Columbia will no longer have the luxury of a “housing crisis”.

– Won’t happen. The Chinese are DESPERATE to get their Renminbi’s OUT of China. China’s only weapon against the West is devaluation – and everytime they devalue, the Chinese upper-crust sees their personal fortunes degrade further. They’ve become very creative about moving their money out – and China is going to extreme lengths to stop them. If they sell-out of Van RE, they’ll move their money elsewhere, not back to the economic basket-case that China is becoming.

As someone who has owned the top part of a medieval palazzo in the south of Italy for 13 years these are the rules of ownership for holiday homes.

1. Buy for whatever cash you have. Don’t mortgage. Italy, Greece, Spain has loads of places where you can get a 2 bed for $75,000. Ours is in Irsina, Basilicata. Home should be worth no more than 10%- 15% of your total worth.

2. Accept that it is a vacation place and will NEVER be as finished and comfortable as your main residence. Spending big money on it is a waste as you will never get it back. Enjoy being rustic.

3. Ensure that your running costs are low and can easily be covered by the odd AirB&B rental. It shouldn’t cost you anything a year to own it.

4. Ensure that it is no more than one hour’s drive from a major airport. We go via Bari, Italy.

5. Go for a countryside or mountain location as being near a beach doubles the price and the place closes down in the off season.

6. Don’t buy unless you can be there for at least 2 months of the year.

7. Understand the tax situation. In Italy holiday home profits (if any) are tax free after 5 years and you can leave up to a million euros to each child tax free when you die so we are not expecting any problems there. Homes are usually registered in the next generations’ names anyway.

Right, buying a “vacation home” then being there every single week for the rest of your life shows off the polished turd you are. With all the places in the world to visit why would sameness or timeshare make any sense? I’ve been around the world staying only in Hyatt hotels, fantastic service and the excitement of a new adventure every day. If the ABC on S Kihei Rd is the furthest you can stretch your imagination you’re simply not drinking enough. BTW, bump up to circumnavigating the Mandarin Oriental and you can pre-order the furniture in advance. The Hyatt pool in Kathmandu is a definite “bucket list” wonderful place to hang out. Get out more, make money, marry a younger woman. You’re only here once friends.

Before you attempt to try and explain the error of democracy and the leaders it has created perhaps you should take a basic level English course so that your grammar and punctuation is at least somewhat correct.

@#66 Jaclo McWacladoodle on 12.15.18 at 5:01 am
Right, buying a “vacation home” then being there every single week for the rest of your life shows off the polished turd you are. With all the places in the world to visit why would sameness or timeshare make any sense? I’ve been around the world staying only in Hyatt hotels
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In a democracy children’s books aren’t banned because they mock the Leader.( Winnie the Poo)
In a democracy the Leader isn’t a leader for life. ( Xi )
In a democracy the Leader can be voted out ( Harper)
In a democracy the Leader can be impeached ( Trump?)
In a democracy we dont lock up 1 million Uighers for “reeducation”

China’s economy is still chugging along for now.
Wait til it grinds to a halt and they need a silly excuse like a war to get the sheeple’s minds off how crappy their lives are in a corrupt dictatorship such as China.

Perhaps, some day, long after Xi is gone we’ll be able to read a harmless childs book like Winnie the Poo in a Beijing Starbucks without the fear of arrest…..
Or better yet, be able to fly directly to another country like Taiwan from Beijing.

My AZ condo pays the bills by March of each year. Vrbo rentals are cash positive for the rest of the year. We go there each year at spring break and the kids love it. Pool, sunshine, and I can store my golf clubs in the closet.

I do plan to sell after 50 to avoid any estate issues though. It’s not for everyone but it works for me.

Rents are up to $3500/mo dec-april and a bit lower in the off season. And Rising every year

We just spent a full 30 days (month of November) in Scottsdale, Arizona. Beautiful condo, in a swank area, close to great shops, amenities, mountains, canyons, scenery, golf courses, restaurants, etc.

Clear blue skies. Warm dry air. Every. Single. Day.

Cheap wine. Cheap food.

$2000 US for the whole month.

Then, you walk away.

Do this any time you want. Anywhere you want.

No ownership worries. No property tax. No financing. No fees. No estate worries. No IRS or CRA worries.

Why buy?
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If I could afford a nice little spot by a lake in the kawarthas I would absolutely buy.
For me I love tinkering, making a place mine with my stuff. Love spending time with friends and family and being able to do that on a whim whenever I want without advanced planning/booking etc.
I love traveling as well but I’ve done a massive amount of that already. Would rather settle on a place at this point.

A friend of mine in Mexico was told by her landlord he needed 1/3 more rent or she must leave. He pushed the wrong button, because she was fed up with this drunk and the bands playing in the laneway day and night. Patricia rented up a beautiful home in a great location for $275 USD per month on a 5 year lease, and will be moving next week.

….” Wednesday, representatives from the Senate, European Embassies of Luxembourg, the Netherlands, and anti-corruption NGOs, including GFI’s Tom Cardamone, gathered in the U.S. Senate’s Kennedy Caucus Room to discuss the growing dangers of illicit financial flows in Europe as major contributors to the European financial crisis.

U.S. Senator Jeff Sessions (R-AL) spoke about his experience with Russia’s systematic aggression in the Balkan areas, and advised they take a stronger stance against Russian encroachment. Dependence on American financial and military hegemony in the region is not a sustainable security solution, he added. Sessions, who also served as Attorney General of Alabama, urged that Central and Eastern Europe push for anti-corruption and transparency laws.

I am convinced that prosperous and open societies make the world better. The values of financial integrity are exactly what we need.

All agreed that financial integrity is the linchpin of stability and security. Hon. Becky Norton Dunlop, Vice President of the Heritage Foundation, said:

Ensuring transparency is key to dealing with corruption.

This is not just a Republican issue. This is not just a Democratic issue; this is an issue for all Americans.

The crisis in Crimea was preventable, argued Natasha Srdoc, Chairman of the Adriatic Institute for Public Policy. Regional stability is greatly undermined by Western European banks promoting fraudulent transactions in the Balkans. Had Ukraine formally broken its ties to Russia and joined the EU, it could have deterred Russia from annexing Crimea. Yet joining the EU may also have exposed the corruption schemes of Ukrainian elites, including that of former President Viktor Yanukovych and former PM Pavlo Lazarenko, whose own anonymous shell company was based in Wyoming.

Yet the annexation of Crimea wasn’t the only crisis that could have been avoided. The European economy may have fared better in the Eurozone crisis had illicit cash flow not undermined the system’s integrity.”

“Illicit financial flows (IFFs) are illegal movements of money or capital from one country to another. GFI classifies this movement as an illicit flow when the funds are illegally earned, transferred, and/or utilized.”

An anonymous shell company is a corporate entity that has disguised its ownership in order to operate without scrutiny from law enforcement or the public. These “phantom firms” can open bank accounts and wire money like any other company, making them a favorite tool for money launderers to hide their business and assets from authorities. They have facilitated crimes ranging from Medicare fraud in the United States to illegal logging in Africa to corruption in Malaysia.”

June 2018:
..” We made the technical case for why Canada must step up and make real strides on the issue of beneficial ownership transparency, an area where they lag severely behind many of their G20 counterparts. It should no longer be a safe haven for dirty money and anonymous companies. This is only the latest in FTC’s regular expert submissions to country authorities and international organizations like the OECD, where we can often find ourselves being the only civil society, critical voice responding to policy consultations…”

I was reading a few interesting articles about China the other day. Apparently China has the worst sex ratio in the world, WAY too many Men. This is apparently going to get way worse before it gets better as the ratio at birth is not expected to level up until around 2030. This is one of the fallouts lingering on from their one child policy.

Compounding this is the huge numbers of Chinese Women who take foreign Men as husbands. It looks like Chinese Women who study abroad are loath to return to the Patriarchal type society they grew up with and pine for the freedom and security they gain from marrying a Western Male.

Now on top of that even, is the unfortunate fact that East Asian Women are fairly well desired by pretty much any Nationality of Men. They are actively courted pretty much wherever they go.

Not to beat this one too hard, but on top of all THAT; is Chinese Men are having a hell of a time courting a requisite number of Western Females to cover their losses. The very same things that turns their own Women against them essentially has all Western Women against them. It’s a cultural thing, not a Man thing; not their fault, and I feel bad for them as they are generally under intense pressure from their society to marry up and start a family.

Google some of the stuff Chinese Men are currently already doing trying to find a mate in China, it’s getting insane. One example is a couple of lawsuits against dating companies that failed to get a mate for two Chinese businessmen who were charged a total of over 1 million (US) dollars over near a decade for their failed services. A million bucks for a dating service? YIKES!

Add all this up, and the expectation is there will be hundreds of millions of Chinese Men who will never marry or have children over the next 2-3 decades The consequences for this on a society are thermonuclear. Nothing worse for a society than having boatloads of angry young aimless Men.

#67 Rob on 12.15.18 at 7:11 am
Ham #50
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Rob, at least the grammar along with his “their tanks are more advanced and you won’t believe slide #10”-like posts are an easy tell that Ham’s a low level PLA troll or a domestically inspired wanta-be… Its actually a compliment to the blog that resources are being diverted here…

If I could afford a nice little spot by a lake in the kawarthas I would absolutely buy.
For me I love tinkering, making a place mine with my stuff. Love spending time with friends and family and being able to do that on a whim whenever I want without advanced planning/booking etc.
I love traveling as well but I’ve done a massive amount of that already. Would rather settle on a place at this point.

——-

I still like the idea of doing the same thing, I love the idea of heading up north to a little cottage on a lake :).

But I know from a guy at work that it’s either a pile of work, or a pile of money. You either pay someone to maintain the place while you’re gone so you don’t blow your time there mowing and getting caught up on maintenance, or you haul up there on the regular to keep it “weekend ready” yourself. He’d be up there in the spring opening it for the season getting murdered by the black flies. He finally crumbled under the workload and sold out, although he said he and his family had great times up there over the years.

Another guy I know near retirement has a hunting camp up near Barry’s Bay. It was built in the 60’s by his Dad and his hunting buddies. The property was held under one of those old long term shared leases. The builders are all gone now, but a smaller group of said guys’ kids still hold the lease and it’s now a 50/50 hunting, recreational property. About 12 guys.

These Provincial hunting camp leases have been discontinued, but it was only a couple grand per year, and multi decade. This guy’s camp is a sweet little get away with 15 years left on the clock still. You need an ATV to get there, but it’s awesome. A couple lakes with no road access means a pike on every other cast, the camp itself is like a big cabin with a covered porch, and a cleared out “yard”.

I might look to hop on the tail end of one of these shared leases down the road. Just a couple hundred $ per year, and minimal maintenance. 3-4 weekends per year maybe. I’ve seen this advertised, and it gives you a shot at buying out the camp from the MNR when the lease expires – which is the only way anyone can keep it. They give you an acre, and they typically go for 10-12K.

IHCTD9 on 12.15.18 at 12:50 pm
I was reading a few interesting articles about China the other day. Apparently China has the worst sex ratio in the world, WAY too many Men. This is apparently going to get way worse before it gets better as the ratio at birth is not expected to level up until around 2030. This is one of the fallouts lingering on from their one child policy.

Compounding this is the huge numbers of Chinese Women who take foreign Men as husbands. It looks like Chinese Women who study abroad are loath to return to the Patriarchal type society they grew up with and pine for the freedom and security they gain from marrying a Western Male.

Now on top of that even, is the unfortunate fact that East Asian Women are fairly well desired by pretty much any Nationality of Men. They are actively courted pretty much wherever they go.

Not to beat this one too hard, but on top of all THAT; is Chinese Men are having a hell of a time courting a requisite number of Western Females to cover their losses. The very same things that turns their own Women against them essentially has all Western Women against them. It’s a cultural thing, not a Man thing; not their fault, and I feel bad for them as they are generally under intense pressure from their society to marry up and start a family.

Google some of the stuff Chinese Men are currently already doing trying to find a mate in China, it’s getting insane. One example is a couple of lawsuits against dating companies that failed to get a mate for two Chinese businessmen who were charged a total of over 1 million (US) dollars over near a decade for their failed services. A million bucks for a dating service? YIKES!

Add all this up, and the expectation is there will be hundreds of millions of Chinese Men who will never marry or have children over the next 2-3 decades The consequences for this on a society are thermonuclear. Nothing worse for a society than having boatloads of angry young aimless Men.

China has big, BIG problems brewing…

………….
If you are ever in Shanghai, be sure to check out the Marriage Market at People’s Square every Saturday & Sunday from 12-5 PM. Fascinating.

Or buy a cheap RV. Not something in the $200,000 range, that’s stupid. My dad in the last few years bought a $160,000 motor home and then sold it again a few years later when he realized he couldn’t get mom to go anywhere and he said “I only moved it 12 feet last year”. So he recovered $100,000 but in my mind that was a blood bath, Armageddon, an end of the type world loss. But at least he got $100,000 back out. Still, $60,000 is a tough loss for a retiree. And none of it was tax deductible.

My RV, on the other hand, is a trailer that I paid $32,000 for about 10 years ago, and we are still using it and will for a long time. I will never lose as much on it as my dad did on his motor home even if my trailer burns to the ground. If you only pay $32,000, you can only lose $32,000.

So I am giving you all a lesson in life. Don’t buy things you can’t afford. There are plenty of cheaper but often just a good options available. You don’t need to buy an $80,000 Hummer and a $40,000 Harley. There are better things that are more useful available for less. And don’t buy this crap they are selling you about how Hardley’s maintain some sort of mythical resale value. They don’t. I know, because I bought and sold one, and I know several people who bought them but now think they can’t sell it, because they would take a bath. I’ve never understood that thinking, my dad made the right decision to ditch his motor home before he lost even more, you don’t hold a losing trade. The only good Hardley is a used Hardley. It’s one of the things you should never buy new. Well, that and motor homes. Porsches. Trophy wives. Anything that isn’t going to be worth much in 10 years. If it isn’t going to be worth much in 10 years pay as little as possible up front.

You don’t need to buy an $80,000 Hummer and a $40,000 Harley.
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I bought a Harley-Davidson Heritage Softail new in 2000.
I still have it and ride it regularly (well, not really between December and March).
I’ve ridden it out to California and back, and all around mid-northern Ontario and Southwestern Ontario.
It’s a great toy.
But, like any other object of desire and consumption, one has to weigh the pros and cons and financial consequences prior to committing their hard earned cash.
Know thyself.
If it’s an impulse buy, based on a future fantasy, don’t do it.
Things used sporadically and/or occasionally are best rented. Not purchased.
If you’re going to use something often, steadily, and regularly, long term, then buying is OK.
And if you’re planning on buying a Harley, don’t wait until you’re 50.
If you’re already 50 or older, forget it.
Your future timeline isn’t long enough.

“The only time it makes sense to buy is if that vacation location will eventually become your full time principle residence.”

That’s a very dumb statement made by a financially and/or mathematically illiterate person. I have two vacation properties that I bought a while ago that I haven’t set my foot in for years. Going to the same place over and over is not for me. Both are rented out and professionally managed for me. On average both have little if any monthly income but both are worth around 350K each now. Once the mortgages are paid off I will sell and pocket the money. My down payment on both was less than 30K.

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.